Verizon sells rural local wireline assets to Frontier

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Verizon has taking a bold step toward focusing their business on wireless, broadband, and global IP services. The company announced plans today to divest its local wireline operations in 14 states. The service areas were predominantly rural in nature and included residential and small-business customers.

The wireline operations will be sold to Frontier for $8.6 billion. $5.3 billion dollars of the transaction will be paid in Frontier common stock to Verizon shareholders. The completion of the transaction is expected to take approximately 12 months pending approval from Frontier shareholders.

As part of the acquisition, 11,000 Verizon company employees who support the local phone business will continue their employment with Frontier once the transaction is completed. Once the additional 4.8 million local access lines are acquired from Verizon, Frontier will maintain 7 million access lines in 27 states. Verizon will still maintain other wireline operations outside of the transaction. At the end of the first quarter, Verizon maintained 35.2 million wireless access lines in 25 states and the District of Columbia.

As stated in the press release, this transaction is not only transformational in nature for Frontier, but to Verizon as well. Verizon is clearly betting their future on services related to wireless, broadband and IP networks. Honestly, that’s not a bad bet.

Just take a look at AT&T for example. AT&T is also trying to transform itself to focus on these same areas. That’s why the company is pushing their Uverse service so hard. I’m sure if AT&T had their way they would try to divest some of their landline business as well. That’s simply because that is what customers are moving away from.

Heck, some people are perfectly happy just having a wireless phone. It’s for this reason you hear more from AT&T and Verizon about their wireless products than anything else. Verizon has indeed made the right steps to pull ahead of AT&T with this move. Well, that’s unless the Frontier stock crashes.

Speak Your Mind

Chris

I’d say “Get the deal done NOW!” if it weren’t for the fact that V is planning on keeping the business customers and leasing back the existing services from Frontier.
For residential customers, at least in Michigan, it will almost have to be in improvement. The worst that could come if this is that Forntier maintains the same dismal level of service and lack of local staff authority/accountabilty that Verizon brought to us when they acquired many of these markets from GTE. At best, maybe Frotier will actually invest something in the local infrastructure beyond minimal maintenance.